Should you employ friends?

Sylvia Pennington

You've got a situation vacant in your business and a mate who's interested.

Will they be harder working and more trustworthy than the randoms who answered your job ad on Seek, if you give them a start? Or is hiring a pal a choice way to annoy your other staff and ruin the friendship?

Bridget Loudon (R) took on her friend and flatmate Jane Watson as head of operations for her business.

Hopefully not, says Expert360 co-founder Bridget Loudon who took on her friend and flatmate Jane Watson as head of operations for the 12-strong professional services online marketplace two months ago.

The pair have shared digs since October last year but despite this connection, former investment banker Watson responded to the company's ad in writing, rather than having a quiet word over the cornflakes.

Brook Hornung from Jelly Time has had a good experience hiring friends.

“Even though we lived together, she went entirely the formal route,” Loudon says.

“She wanted to differentiate her work and home selves.”

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Being objective about your friend's experience and skills at the outset is vital if the business relationship is to succeed, Loudon believes. Ideally they should be a standout candidate on their own merits, as Watson was.

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“Don't choose someone on the basis that he knows me and will help me out,” Loudon says.

“You've got to make sure their reputation can stand on its own two feet … If you're not objective, you're going to shoot yourself in the foot.”

Despite Watson's keenness and suitability for the role, Loudon admits to some initial misgivings. After a conversation with her co-founder about the likely fallout if things turned sour, she concluded it was a gamble she was willing to take.

“I thought long and hard - was the upside great enough to cover the risk that this might all blow up and I'd have to move out of my home?” Loudon says.

The answer would have been different, had the pair been besties, she adds.

She wanted to differentiate her work and home selves.

“Don't hire a best friend - there's too much on the line. When you're running a small business it's hard and you need a safe place to run to - you don't want to compromise that.”

Small business and franchising consultant Michael Sherlock says her concern was well founded. He's had plenty of experience sorting casual gigs for friends' and relations' teens, in his previous role as boss of the Brumby's bakery chain, and has employed friends directly, on a temporary basis, twice.

Neither experience was a particularly happy one and he's learnt his lesson that a role shouldn't be offered impulsively, or on emotional grounds, because someone's down on their luck or great company on the golf course.

“You've got to be very cautious because initially it's attractive,” Sherlock says.

“You think you know what you're getting – the devil you know. You might know them socially but that doesn't mean you know their ability and work habits.”

Friends-cum-employees are more likely to push the boundaries, “kissing you hello and walking in when you're busy”, Sherlock says. Allowing them to do so can spark resentment among other staff who aren't on the same easy terms and establishing an appropriate distance in the office may feel uncomfortably like pulling rank.

Easier to make a mate of an employee than vice versa, agrees Greg Chapman, a business coach at Empower Business Solutions.

“It is fraught - when you work with friends you can very quickly lose a friend,” he says.

“You need to start with a frank conversation with your friend and make sure both parties go in with their eyes open.”

Managing below-par friend/employees is especially challenging for small business owners who typically don't have the capacity to carry them.

“There's no place to hide for people who aren't performing,” Chapman says.

“Small business owners have got to make payroll every month - it's personal and that makes it much harder if a friend is not carrying their weight…You have to make it very clear to them, 'if the business is not making money, it comes out of my pocket'.”